August 14, 2012

Balancing the Overall Budget Is Like AtB Cost Cutting in a Company Whose Stuff Isn't Selling

It is not the most important thing for winning back marketshare or to deepen the market.

Time to get Auf of support of unrequired complexity that willy-nilly keeps people employed, for it can eventually strangulate the very economy that tried to be overly humane in spinning/protecting such roles and jobs.

Not to diminish the importance of thoughtful zero-base budgeting, but the most important thing for a turnaround is the restructuring - to get the best people, wherever you can find them, to be incharge of key LINE functions: production and delivery, and pay them the best. Ability is established when personnel are sought by players in the marketplace, not in the degrees they have bought in Universities. In tough times, in a turnaround process, unaffordable Staff positions are cut. So too are roles that appear to be Line functions but are actually pretense roles to keep people on the payroll - that do not add value, only procedural delays in getting the needed things done, to keep their own importance and appearance of relevance.

Open Meritocracy ultimately yields dividends for everyone, even earning back - many times over - the severance paid out to the mismatched to pursue more appropriate opportunities or retrain for them.
In the context of a country, this implies playing a bigger game than just managing the unemployment number and the fiscal deficit of the moment. It includes not trying to fit a square peg in a round hole, not living in denial of structural unemployment, manifest and latent.

Some make-work “job creators and protectors” that eventually turn counterproductive, strangulating, and eventually economy contracting, while also worsening the public deficit, are:

Pretense of Solid Capitalism to Create or Protect Sham Jobs

Corporate Governance & Regulation
There are complex codes of Corporate Governance in place. Yet there is no Corporate Governance on the ground. The Rajat Gupta episode is a ‘shining’ example of how pristine it truly is for shareholders’ representatives to safeguard their interests. Corporate Governance eventually condenses down to making and filing a few statements - additional paperwork with no value. But it creates a ton of white-collar employment in producing this paperwork, and verifying that all blocks in those templates are filled in.

A much simpler approach would be to simply mandate the limits of Executive compensation, linked to profits computed to published guidelines. And no need to file any paperwork, but violations will get punished, just like for stealing. We do not file paperwork every year that we did not steal from our neighbors, yet violation is punished.

Same is the case with Sorbanes Oxley. A ton of new jobs opportunities for the legal, accounting, and auditing personnel - to produce more compliance reports!

Overly complicated laws might also be connected with having a World with more employment, in legal, accounting, and litigation services. But it discourages people that want to really produce value – because they have to carry the file pushers and making-the-case-people on their shoulders – and not even as dependents but as their lords.

Even a blind person can see that the prices of health services are simply nonsense. Just being in a hospital facility for one hour can get you a bill of more than $1000, bill for doctor services would be separate! I know this because I have received such bills, asking me to pay up because the “insurance” provider is trying to wriggle out on some excuse. The bills for a small hospital room (just room rent) for 3 nights can come to $8,000!! Not even Four Seasons charges this. And, by the way, if you as much as used up a bottle of water in that room, THAT is separate, as is the doctor and nurse fees et al.

The insurance companies have simply manipulated all health services prices to suit their business model and controlling the consumer from actually accessing the care that he has been buying insurance for.

The right solution to obtain a market based, sensibly priced healthcare is to outlaw health insurance, and to nationalize malpractice insurance. To, at least, force health insurance to be limited to Catastrophic Only policies by law, or to seed the concept via a Public Option. With that in place, it would be best to get rid of the Employer Mandate and, instead, mandate employers to add the hitherto health spend on the employees to their paychecks, and let them obtain their own combination of insurance and direct buy of health services. I’m not sure if this approach will work for seniors, as it is difficult for them to shop around for their healthcare, especially when, at present, there is no move to outlaw health “insurers”, the market seigers, from selling “coverage” for routine illness, nor is there any to nationalize malpractice insurance.

Two things come in the way of cleanup of healthcare, with the result that raw care prices are inflated 10 times and, post insurance adjustments, we pay a little over what the market price of the health service would have been if there were no insurance (so what have we really been, additionally, paying the insurance premiums for?)

Firstly, is the desire to look like being a Capitalist Society to the extent possible - so the Government is not supposed to mandate the abolition of health insurance, cannot operate a public option, and cannot nationalize malpractice insurance. So keep suffering!

Secondly, abolishing or greatly slashing the size of the health insurance industry will mean job losses for the moment and, now somehow, supposedly Capitalist Govt becomes responsible for the Unemployment figure! So, it’s a cocktail that eventually gets lethal than life saving.

Low Income Immigration v/s High Income Immigration

The idea is to immigrate people for jobs that US persons think pay too low for them to be interested, while making it difficult for companies to bring in people for jobs that pay well. The unreasonable hope in this is that a job is a job and a person that has the University qualification it needs can do it, and do it well. This unfortunately is not true. Not every engineer is same for a given technology job. It is much more than qualification, for the individual energy, enthusiasm and aptitude for that specific job is important. Someone who has been say, a manager in a technology company cannot just pick up a technology job when his manager position is extinguished in reorganization. A market-based simple skilled immigration paradigm, not bureaucracy driven case-file approach, is a must have. In the linked article, I have argued:

An alternative approach can be to survey businesses to establish the number of workers that will need to be imported in each profession – IT, Finance, and so on. Based on these numbers, allocate Visa and Green Card numbers to be given out that year. In granting Visas, go in decreasing order of wage offered to the immigrant worker. In granting Permanent Residence, go in decreasing order of the tax the person paid in preceding 5 years. This approach automatically favors the professionals that are the best contributors into the economy (as producers and consumers) and the welfare system, and truly most needed by employers because the wage paid says more than anything else on this matter; while, with the numerical caps, also prevents the displacement of “US workers” by wage undercutting. No file-by-file procedure Bureaucracy or employer sponsorship or expensive attorney representation required to run this - this can work more like applying to DMV for a driver's license with a few required documents or merely the SSN. This approach also incidentally increases the concentration of such people in society that will be able to stomach a complete breakdown, or partial or complete rollback, of the welfare system should it occur.
Keeping and continuing a system that adds more and more low earning people in the working population, and looking the other way on structural unemployment – manifest and latent, will yield a bigger disaster on deficits and welfare when the current working age population retires. The economy needs a bigger number of young, energetic, productive people, homegrown and immigrated, that can find themselves well-paying jobs. Let young people sell themselves in a free market for talent, and the others will be able to find some service they can sell them. Ultimately, the formers will be able to cover some of the costs of retirement benefits for the previous generation, buy houses, in the process support service sector jobs in real estate and banking, and provide some support to sinking home prices. In the scenario currently running, the middle aged get artificially maintained in their jobs, then get to enjoy all their entitlements As-Is, and pass on an empty bag to those below 55 now. Any 'adjustments' need to hit everyone, starting with the ones whose elected representatives all these years ran an era of lopsided Financial Governance and Immigration.

Keeping People in Their Jobs

There are herculean procedures in removing personnel that are deadwood for a company. On top of that, to “manage” the deficit figure, the retirement age keeps receding, leaving even smaller chance for a rejuvenating refresh of company personnel with fresh workers, homegrown and immigrated. Eventually, big corporate entities begin to function like Govt bureaucracies, dependent on Government spending to rake in more Revenue (like Revenue shoring were a departmental budget allocation).


Government, as well as Big Business, needs to shed procedures and artificial jobs created to administer them, that strangulate producers and lord over them while actually living off their work.
Force-keeping people in their mismatched jobs and Org structures, in their homes with “value” intact, banks in the black without mark-to-market and without allowing prices to descend to the state of the economy, are eventually the most dangerous steam leaks for the economy. And like entitlements, they contribute to bigger deficits. Not to deny the need for entitlement and unemployment reform, but a singular focus on deficits, and plugging the hole merely with retirement "reform" for the Under 55, especially involving raising of the retirement age rather than cutting it, is like cost cutting measures in a company whose stuff isn’t selling. Eventually it is restructuring that brings the turnaround, and holding Govt responsible for job losses in the near term is a huge distraction.

1 comment:

  1. "Give me Liberty, or Give me Death!" - Patrick Henry

    What a brilliant ruling by the United States Supreme Court on the affordable health care act (Obamacare). Stunningly brilliant in my humble opinion. I could not have ask for a better ruling on a potentially catastrophic healthcare act than We The People Of The United States received from our Supreme Court.

    If the court had upheld the constitutionality of the individual mandate under the commerce clause it would have meant the catastrophic loss of the most precious thing we own. Our individual liberty. Thank you! Thank you! Thank you! Supreme Court.

    There is no mandate to buy private for-profit health insurance. There is only a nominal tax on income eligible individuals who don’t have health insurance. This is a HUGE! difference. And I suspect that tax may be subject to constitutional challenge as it ripens.

    This is a critically important distinction. Because under the commerce clause individuals would have been compelled to support the most costly, dangerous, unethical, morally repugnant, and defective type of health insurance you can have. For-profit health insurance, and the for-profit proxies called private non-profits and co-ops.

    Equally impressive in the courts ruling was the majorities willingness to throw out the whole law if the court could not find a way to sever the individual mandate under the commerce clause from the rest of the act. Bravo! Supreme Court.

    Thanks to the Supreme Court we now have an opportunity to fix our healthcare crisis the right way. Without the obscene delusion that Washington can get away with forcing Americans to buy a costly, dangerous and highly defective private product (for-profit health insurance).

    During the passage of ACA/Obamacare some politicians said that the ACA was better than nothing. But the truth was that until the Supreme Court fixed it the ACA/Obamacare was worse than nothing at all. It would have meant the catastrophic loss of your precious liberty for the false promise and illusion of healthcare security under the deadly and costly for-profit healthcare system that dominates American healthcare.

    As everyone knows now. The fix for our healthcare crisis is a single payer system (Medicare for all) like the rest of the developed world has. Or a robust Public Option choice available to everyone on day one that can quickly lead to a single payer system.

    Talk of privatizing/profiteering from Medicare or social security is highly corrupt and Crazy! talk. And you should cut the political throats of any politicians giving lip service to such an asinine idea. Medicare should be expanded, not privatized or eliminated.

    We still have a healthcare crisis in America. With hundreds of thousands dieing needlessly every year in America. And a for-profit medical industrial complex that threatens the security and health of the entire world. The ACA/Obamacare will not fix that.

    The for-profit medical industrial complex has already attacked the world with H1N1 killing thousands, and injuring millions. And more attacks are planned for profit, and to feed their greed.

    To all of you who have fought so hard to do the kind and right thing for your fellow human beings at a time of our greatest needs I applaud you. Be proud of your-self.

    God Bless You my fellow human beings. I'm proud to be one of you. You did good.

    See you on the battle field.


    jacksmith – WorkingClass :-)